336.3-302 MS 1990 [Repealed, 1992 c 565 s 114
336.3-302 HOLDER IN DUE COURSE.
(a) Subject to subsection (c) and section
, "holder in due course" means the
holder of an instrument if:
(1) the instrument when issued or negotiated to the holder does not bear such apparent
evidence of forgery or alteration or is not otherwise so irregular or incomplete as to call into
question its authenticity; and
(2) the holder took the instrument (i) for value, (ii) in good faith, (iii) without notice that
the instrument is overdue or has been dishonored or that there is an uncured default with respect
to payment of another instrument issued as part of the same series, (iv) without notice that the
instrument contains an unauthorized signature or has been altered, (v) without notice of any claim
to the instrument described in section
, and (vi) without notice that any party has a
defense or claim in recoupment described in section
(b) Notice of discharge of a party, other than discharge in an insolvency proceeding, is not
notice of a defense under subsection (a), but discharge is effective against a person who became a
holder in due course with notice of the discharge. Public filing or recording of a document does
not of itself constitute notice of a defense, claim in recoupment, or claim to the instrument.
(c) Except to the extent a transferor or predecessor in interest has rights as a holder in due
course, a person does not acquire rights of a holder in due course of an instrument taken (i) by
legal process or by purchase in an execution, bankruptcy, or creditor's sale or similar proceeding,
(ii) by purchase as part of a bulk transaction not in ordinary course of business of the transferor, or
(iii) as the successor in interest to an estate or other organization.
(d) If, under section
, the promise of performance that is the consideration for
an instrument has been partially performed, the holder may assert rights as a holder in due course
of the instrument only to the fraction of the amount payable under the instrument equal to the
value of the partial performance divided by the value of the promised performance.
(e) If (i) the person entitled to enforce an instrument has only a security interest in the
instrument and (ii) the person obliged to pay the instrument has a defense, claim in recoupment, or
claim to the instrument that may be asserted against the person who granted the security interest,
the person entitled to enforce the instrument may assert rights as a holder in due course only to an
amount payable under the instrument which, at the time of enforcement of the instrument, does
not exceed the amount of the unpaid obligation secured.
(f) To be effective, notice must be received at a time and in a manner that gives a reasonable
opportunity to act on it.
(g) This section is subject to any law limiting status as a holder in due course in particular
classes of transactions.
History: 1992 c 565 s 30